Software & Technology

Even the smallest and inconsequential of endeavors could mean large savings in the form of tax credits for software and technology companies.

Software and technology companies are missing out on millions of dollars in savings each year because they do not realize that many of their activities qualify them for R&D tax credits. Those that invest in development or improvement of a technology, product or process qualifies.

Do any of these activities sound familiar to your business processes? These (and several other activities) qualify software and technology companies for receiving R&D tax credits.

Developing a new product, process, or software, or improvement of an existing product, process or software

Developing software that is intended for sale, lease, license or third party use

Developing computer software for a microprocessor-based control system that operates and monitors a production machine

Developing computer software for a computerized control system that regulates the operation of a fabrication process

Developing an internal-use software system that collects production information and generates sets of management and accounting reports

The Forbes article ‘Now Every Company Is A Software Company’ noted that even companies outside the traditional high-tech industry are also becoming involved in software development in order to find new growth. Because of this, several companies that do not belong to the software and technology industry space can also claim R&D tax credits thanks to qualifying processes. This also includes those companies that invest in the development of an e-commerce site or client/vendor web portal.

Start-up companies can now use the credits to offset payroll taxes!

As of tax year 2016, qualified small businesses are now able to offset a portion of their payroll taxes using R&D Tax Credits. Specifically, starting in 2017, qualifying businesses may offset the Employer portion of the FICA portion of their payroll taxes using R&D Tax Credits claimed on their 2016 and future federal returns. R&D Tax Credits are applied against quarterly payroll tax payments. In any given year, the maximum payroll tax offset allowed is $250,000. This is a significant positive change to the code that can give “start-up” companies an immediate cash benefit.

BRS’s team of professionals has over 25 years of experience and expertise and can work with you to develop a clear and accurate history of your development efforts, capture all eligible costs, broaden the scope of qualifying activities when appropriate, and prepare the documentation you need to maximize the money you are eligible for.

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